Posted By linker 5
Posted on February 3, 2021
By Shu Zhang
SINGAPORE (Reuters) – Oil prices rose on Wednesday after hitting their highest in about a year in the previous session, boosted by an unexpected draw in U.S. crude and gasoline stocks, fuelling demand recovery hopes as OPEC+ forecasts the market will be in deficit in 2021.
Market sentiment was also bolstered by news that Democrats in the U.S. Congress took the first steps toward advancing President Joe Biden’s proposed $1.9 trillion coronavirus aid plan without Republican support.
U.S. West Texas Intermediate (WTI) crude futures climbed 39 cents, or 0.71%, to $55.15 a barrel at 0744 GMT, for a third straight day of gains. The benchmark hit a one-year high of $55.26 on Tuesday.
Brent crude futures rose 47 cents, or 0.82%, to $57.93 a barrel, for a fourth day of gains after hitting $58.05 on Tuesday, the highest since January last year.
“A swing in sentiment back to U.S. stimulus and the global recovery, continued cold weather in the U.S. and Northern Asia, plus a massive fall in U.S. API Crude Inventories … saw oil prices explode higher,” Jeffrey Halley, senior market analyst at OANDA wrote in a note.
The American Petroleum Institute (API) reported U.S. crude oil inventories fell by 4.3 million barrels in the week to Jan. 29, compared with analysts’ expectations in a Reuters poll for a build of 446,000 barrels.[API/S]
Gasoline stocks fell by 240,000 barrels, defying analysts’ expectations for a build of 1.1 million barrels, while distillate inventories, which include heating oil and jet fuel, fell by 1.6 million barrels, a bigger draw than expected.
U.S. government data is due at 1530 GMT from the Energy Information Administration.
The market was also buoyed by the latest assessment by the Organization of the Petroleum Exporting Countries and allies, together known as OPEC+, that oil stockpiles will decline to below a five-year average by June.
That showed the producers’ output cuts were succeeding in bringing the market back into balance.
“The strategy was very clear. OPEC and allies set out to cut a deal that would normalise global excess inventory through 2021 – well, they’re on track,” said Lachlan Shaw, head of commodity research at National Australia Bank.
OPEC+ expects output cuts will keep the market in deficit throughout this year, peaking at 2 million barrels per day in May, even though it revised down its outlook for demand growth, a document seen by Reuters on Tuesday showed.
A ministerial meeting will convene on Wednesday, although it is not expected to recommend any adjustments to oil output policy.
(Reporting by Shu Zhang; Aditional reporting by Sonali Paul in Melbourne; Editing by Richard Pullin)
